Paul Morra Senior Business Development Manager BMO Insurance Whole Life Plan, Spring 2017

New product, new opportunities Agenda New product, new opportunities What we’ve learned about the whole life market Our new plan: BMO Insurance Whole Life Plan Case study Performance Bonus Our other solutions Ideas to grow your business

Continued low interest rates = lower dividend scales on PAR Decreasing fixed income yields continue to drag down dividend rates -Prolonged low interest rate environment has had an impact on the insurance industry -In particular, this has impacted the yield on bond yields – the result is seen on participating whole life par plan dividend scales -highs of +12% in the mid 80s; current levels are about half of that around 6% -this has prompted many advisors to take a more cautionary note when it comes to illustrating whole life plans – showing the primary scenario along with a -1% scenario seems to be the norm these days; some advisors may also be choosing to look at -2% scenarios

According to LIMRA, take a look at who buys insurance… Insureds between the ages of 45-64 account for 27% of policies but 44% of premiums BMO Insurance’s focus: ages 45-65 As are as age demographics, we understand that whole life insurance has a broad appeal From young to old, whole life insurance can fit many planning needs As far as BMO Insurance is concerned, we feel that our products will also have a broad appeal but our focus is in the 45-65 age bracket Source: LIMRA, 2015 Annual Canadian Individual Life Insurance Sales Supplement

Premium pay periods… according to a BMO Insurance survey* 20 Pay and Life Pay most common premium options Quicker Pay options have been introduced into the marketplace have an appeal for affluent and business owner clients Advisors and clients are looking for more premium options -Whole life plans have been on the market for many years – as far as premium options are concerned, 20 Pay and Life Pay options have been around for a long time and are pretty much standard across most whole life plans; -In a survey that BMO Insurance conducted, advisors told us that on average, they account for 82% of all new whole life policies -advisors also said that they want more options when it comes to premium payment periods -in particular, we’ve seen that quicker pay options are becoming more popular….. This may be prompted by the recent change in tax rules and the appeal that these premium options have with affluent clients Note: in BMO survey, n=136 Given the following Premium Pay Period options, how would your Par Whole Life Sales likely be allocated (percentage wise/% by # of policies) across each of these options? (TOTAL MUST ADD UP TO 100) Source: BMO Insurance Whole Insurance Survey: Summer 2015

Dividend Options… according to a BMO Insurance survey Close to ¾ of an advisor’s new par whole life clients will select Paid-Up Additions -When it comes to which dividend option clients are selecting, we found in our survey that advisors said that on average, close to ¾ of their clients choose Paid-Up Additions -Other options like 1 year term insurance, premium reduction or the cash option are used less frequently. Note: in BMO survey, n=136 Most popular dividend option: Paid-Up Additions Overall, what percentage (%) of your clients choose the following DIVIDEND PAYMENT OPTIONS? (Total must add up to 100) Source: BMO Insurance Whole Insurance Survey: Summer 2015

Introducing the BMO Insurance Whole Life Plan BMO Insurance Whole Life Plan, Spring 2017

Key Features: simple design 3 premium options 10 Pay, 20 Pay and Pay to Age 100 (“Life Pay”) Performance Bonus Performance Bonus = Performance Bonus Rate x Guaranteed Cash Value Automatically used to buy Paid-Up Additions Backed by the strength of BMO Capital Markets and BMO Global Asset Management Performs well in adverse scenarios Optional riders Term 10, 20 and 30 riders, LB 10, 20, 75 and 100 riders Waiver of Premium BMO Insurance Health Advocate Plan Simple. 3 options to suite different clients needs: Pay to age 100- most affordable 20 pay option – for clients looking to pay up their policies within a reasonable period of time 10 pay for clients who want to quick pay their policies – may have a special appeal for affluent clients, business owners Simple performance bonus formula Based on guaranteed values; PBR x GCSV; right in the contract Used to automatically buy PUA And backed by the strength and investment expertise at BMOFG; Mathew will provide more details What you’ll see is that this product performs well in adverse scenarios Simple set off riders: term, CI, WP BMOI HAP – BD and MS services offered at no extra cost on all policies

Key Features: simple design… with easy-to-use tools Easy-to-use software Easy life insurance application Easy-to-understand policy contract and statement To help support advisors: Simple application which we have received great comments about Simple contract language – easy to explain to clients; includes table of guaranteed cash values and RPU values Simple policy statement: 2 pages

Key Features: flexible options Premium switch option* switch to longer pay duration, e.g. from 10 Pay to 20 Pay Reduced Paid-Up Option guaranteed amounts – stated in the policy contract can be used to create a quicker pay (e.g. 5 or 8 pay) Policy loans borrow up to 90% of the cash value (cash withdrawals) borrow to pay for premium (automatic premium loan) current interest rate: 5.50% Flexible Premium switch provides ability for clients to lower premiums if affordability becomes an issue Can switch from 10 -> 20, 10 -> 100, 20 -> 100 Can’t switch from 20 -> 10 or 100 -> 20, 100 -> 10 For added flexibility, RPU allows clients to stop paying premiums, for a reduced amount of coverage To help you demonstrate the impact of this, we’ve put the RPU feature right on the software so you can show your clients how this could work for them For clients who choose the 10 pay, you may want to use this feature to create a “quicker” pay – essentially turn 10 pay into a 5 pay or 8 pay Policy loans: borrow to pay premiums or draw out cash; variable rate currently at 5.5% helps with changes to client’s financial situation/affordability *Subject to underwriting, if exercised.

Key Features: strong guarantees Highly competitive Guaranteed Cash Values performs well in adverse scenarios Guaranteed Reduced Paid-Up Values Performance Bonus Rate: guaranteed to be at least 5.50% until April 30, 2020 will never be negative Guaranteed CV are very competitive – will see in case studies Helps this product in adverse scenarios – when benchmarking how it will perform against other plans in the marketplace Guaranteed RPU – right in the policy contract – and can illustrate on the Wave Important element is the performance bonus – strong guarantee: AT LEAST 5.5% until April 30, 2020 Never be negative Guaranteed.

Estate Planning Solutions Case Study

Case study: Carl and Cathy 55 year old professionals Have three adult children from their first marriages: Ellen, Jason and Christine Have a sizeable retirement savings portfolio Already have some life insurance Have a cottage that’s increased significantly in value Plan to retire in 10 years

Insurance Checklist for Carl and Cathy Results of needs analysis: Distribute their estate equitably between their three children Pay-off plan quickly Leave the cottage to Ellen and the rest of their to estate to Jason and Christine Minimize the income tax they pay on their investment portfolio Minimize the negative impact that volatility could have on their investment returns

The BMO Insurance Whole Life Plan solution for Carl and Cathy $500,000 of basic coverage on a Joint Last-to-Die basis “10 Pay” premium option: $25,595/year Use the death benefit to offset the capital gains tax due on their cottage Low maintenance: assets behind the plan managed by BMO Insurance in partnership with BMO Capital Markets and BMO Global Asset Management

10-Pay (Joint Last MNS 55/FNS 55) Total Death Benefit Primary (Current) Scenario Alternative Scenario   BMO WLP PAR WLP Non-PAR WLP Annual Deposit 25,595 Total Deposit 255,950 FACE Solve 500,000 381,073 Rate 5.50% 6.25% 5.25% Year 5 507,113 417,499 527,487 Year 10 542,755 500,612 683,130 Year 15 630,620 604,530 623,625 Year 20 776,845 725,730 689,842 Year 25 944,103 870,461 763,608 Age 85 1,107,924 1,049,362 852,846 Year 35 1,267,740 1,280,339 959,224 Year 40 1,423,038 1,560,835 1,069,410 Year 45 1,573,205 1,838,510 1,132,357   BMO WLP PAR WLP Non-PAR WLP Annual Deposit 25,595 Total Deposit 255,950 FACE Solve 500,000 381,073 Rate Minus 1% Year 5 505,820 410,090 522,602 Year 10 534,983 470,277 662,411 Year 15 606,871 539,580 581,009 Year 20 726,508 617,701 616,760 Year 25 863,356 707,964 648,892 Age 85 997,392 816,182 685,835 Year 35 1,128,150 953,015 727,770 Year 40 1,255,211 1,113,083 768,838 Year 45 1,378,075 1,259,244 791,158 PAR WLP: Sun Life Non-PAR WLP: Manulife Performax Gold Source: Wave 34.0 and other companies illustration software NOTE: For “Non-PAR WLP”: ADO & Premium Offset are applied to achieve 10-Pay.

10-Pay (Joint Last MNS 55/FNS 55) Total Death Benefit: the effect of an alternative (-1%) scenario   BMO WLP PAR WLP NON-PAR WLP Year 15 -3.8% -10.9% -6.8% Age 85 -10.0% -22.2% -19.6% Year 45 -12.4% -31.5% -30.1% The BMO Insurance Whole Life Plan projects better values in alternative scenarios! PAR WLP: Sun Life Non-PAR WLP: Manulife Performax Gold Source: Wave 34.0 and other companies illustration software NOTE: For “Non-PAR WLP”: ADO & Premium Offset are applied to achieve 10-Pay.

10-Pay (Joint Last MNS 55/FNS 55) Guaranteed Cash Value   BMO WLP PAR WLP NON-PAR WLP Annual Deposit 25,595 Total Deposit 255,950 FACE Solve 500,000 381,073 Year 5 16,475 4,798 6,076 Year 10 66,980 102,204 21,290 Year 15 167,380 204,834 65,120 Year 20 293,170 233,060 132,114 Year 25 329,400 261,866 166,688 Age 85 364,085 290,183 200,515 Year 35 395,305 318,219 233,091 Year 40 421,975 350,701 263,656 Year 45 444,350 358,628 289,540 GTD CSV ≥ Total Deposits Year 20 Year 24 Year 38 PAR WLP: Sun Life Non-PAR WLP: Manulife Performax Gold Test case 2:  Carl and Cathy, JLTD, two 55 year olds, 10 pay Guaranteed CSV break-even (= total premiums paid):  year 20 GCSV IRR at 85 (actual age, not ESA):              1.1%  (1.2% for ESA 85) Total CV IRR at 85 (actual age, current bonus):  3.9%  (4.1% for ESA 85 Source: Wave 34.0 and other companies illustration software NOTE: For “Non-PAR WLP”: ADO & Premium Offset are applied to achieve 10-Pay.

10-Pay (Joint Last MNS 55/FNS 55) Total Cash Value Primary (Current) Scenario Alternative Scenario   BMO WLP PAR WLP NON-PAR WLP Annual Deposit 25,595 Total Deposit 255,950 FACE Solve 500,000 381,073 Rate 5.50% 6.25% 5.25% Year 5 18,619 17,855 74,378 Year 10 82,115 152,126 179,550 Year 15 221,287 312,310 207,224 Year 20 425,192 421,346 333,266 Year 25 571,774 561,337 439,472 Age 85 739,101 740,596 554,095 Year 35 923,234 973,955 688,501 Year 40 1,120,401 1,295,879 833,517 Year 45 1,331,000 1,643,592 958,942   BMO WLP PAR WLP NON-PAR WLP Annual Deposit 25,595 Total Deposit 255,950 FACE Solve 500,000 381,073 Rate Minus 1% Year 5 18,230 15,199 72,099 Year 10 79,364 139,457 168,095 Year 15 211,486 281,071 182,257 Year 20 401,187 362,330 285,656 Year 25 527,705 461,900 357,669 Age 85 670,916 583,438 428,928 Year 35 827,246 735,273 506,185 Year 40 993,413 937,158 584,679 Year 45 1,169,789 1,132,876 654,930 PAR WLP: Sun Life Non-PAR WLP: Manulife Performax Gold Source: Wave 34.0 and other companies illustration software NOTE: For Non-PAR Whole Life plan: ADO & Premium Offset are applied to achieve 10-Pay.

10-Pay (Joint Last MNS 55/FNS 55) Total Cash Value: the effect of an alternative (-1%) scenario   BMO WLP PAR WLP Non-PAR WLP Year 15 -4.4% -10.0% -12.0% Age 85 -9.2% -21.2% -22.6% Year 45 -12.1% -31.1% -31.7% The BMO Insurance Whole Life Plan projects better values in alternative scenarios! PAR WLP: Sun Life Non-PAR WLP: Manulife Performax Gold Source: Wave 34.0 and other companies illustration software NOTE: For “Non-PAR WLP”: ADO & Premium Offset are applied to achieve 10-Pay.

10-Pay (Joint Last MNS 55/FNS 55) Internal Rate of Return on Total Death Benefit (%) Primary (Current) Scenario   BMO WLP PAR WLP NON-PAR WLP Annual Deposit 25,595 Total Deposit 255,950 FACE Solve 500,000 381,073 Rate 5.50% 6.25% 5.25% Year 5 50.06 42.41 51.64 Year 10 13.32 11.91 17.32 Year 15 8.67 8.26 8.56 Year 20 7.29 6.83 6.49 Year 25 6.08 5.42 Age 85 5.86 5.64 4.80 Year 35 5.35 5.38 4.40 Year 40 4.92 5.19 4.09 Year 45 4.56 4.96 3.72 PAR WLP: Sun Life Non-PAR WLP: Manulife Performax Gold Source: Wave 34.0 and other companies illustration software NOTE: For “Non-PAR WLP”: ADO & Premium Offset are applied to achieve 10-Pay.

Insurance Checklist for Carl and Cathy Results of needs analysis: Distribute their estate equitably between their three children Pay-off plan quickly Leave the cottage to Ellen and the rest of their to estate to Jason and Christine Minimize the income tax they pay on their investment portfolio Minimize the negative impact that volatility could have on their investment returns

The Performance Bonus

BMO Insurance Whole Life Plan: Performance Bonus Performance Bonus Rate x Guaranteed Cash Value Performance Bonus Rate Declared annually Based on the smoothed market performance Guaranteed never to be negative Guaranteed to be at least 5.50% until April 30, 2020 Performance bonus Simple formula vs complicated/black box in the industry Performance bonus rate U.S exposure provides diversification protection

BMO Insurance Whole Life Plan: performance backed by expertise Part of BMO Financial Group with $692 billion in total assets as of January 31, 2017 Named Best House in Canada for structured products at the 2016 American Structured Products and Derivative Awards. - Able to get the 100-200% through key partnerships, CM. BMO Asset Management Inc. is part of BMO Global Asset Management which has more than US$229 billion in assets under management globally as of December 31, 2016*. *Assets under management include discretionary and non-discretionary assets under management.

Asset Exposure: total exposure - Real estate exposure amongst other sectors *Approximated as of February 28, 2017

Asset Exposure: fixed income exposure - Real estate exposure amongst other sectors *As of February 28, 2017

Asset Exposure: equity exposure - Real estate exposure amongst other sectors Includes Canadian and U.S. exposure *As of February 28, 2017

Performance Rate: back-tested results Calendar Year Portfolio Return Performance Bonus Rate Rolling 5 Year Portfolio Return 2008 4.49% 5.50% 2009 9.36% 6.90% 2010 8.25% 5.75% 7.35% 2011 6.00% 2012 7.01% 6.25% 7.28% 2013 7.48% 6.50% 7.89% 2014 9.20% 6.75% 7.86% 2015 0.63% 7.00% 6.29% 2016 6.69% 6.16% Results assume level deposit each month into the fund - Stability of our PBR over the portfolio return

Performance Bonus Rate: illustration scenarios If equity market returns are… 5% 7% 9% Fixed Income 2.25% Equity 3.25% 4.25% Performance Bonus 4.50% 5.50% 6.50% Illustration Rate Minus 1 Current Plus 1 This is an approximation based on typical market conditions.

BMO Insurance Whole Life Plan: Simple. Flexible. Guaranteed. Simple plan design Strong guaranteed values Performance Bonus Backed by the expertise at BMO Capital Markets and BMO Global Asset Management US and Canadian equity exposure Performance Bonus = Performance Bonus Rate x Guaranteed Cash Value Smoothing formula will allow for gradual changes in the PBR Performs well in alternative scenarios Flexibility 3 premium options Premium Switch Option* Reduced Paid-Up Option that you can illustrate *Subject to underwriting, if exercised.

What is the guarantee on the Performance Bonus Rate? The Performance Bonus Rate is guaranteed to be at least 5.50% until April 30, 2020 and is also guaranteed to never be negative for the life of the policy.

Don’t forget about our other solutions

We have solutions for a broad range of financial planning goals! Whole Life Insurance BMO Insurance Whole Life Plan Pure Term 100 Universal Life Insurance Life Dimensions Life Dimensions (Low Fees) Wealth Dimensions LifeProvider (Low Fees) Term Insurance Term 10, 20 and 30 insureNOW insureNOW Plus Lending programs from BMO Private Banking and Specialized Lending groups Critical Illness Insurance Living Benefit 10 Living Benefit 20 Living Benefit 75 Living Benefit 100 15 Pay Living Benefit 100 Single Premium Immediate Annuities BMO Guaranteed Investment Funds 75/75 75/100 100/100

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We’re here to help. Give us a call! Regional Vice President Business Development John McMeans 416-671-5496 Senior Business Development Manager Paul Morra 647-459 4651 Business Development Specialist Mimi Cheng 416-756-3640 extension 4017 Ontario Sales Office 1-800-608-7303